Wolves signed Wallace from Portsmouth during the summer transfer window, a deal considered to be quite a coup at the time, but the attacking midfielder has struggled at Molineux.
Wallace has made seven appearances for Wolves so far this season, and Jackett says that fans of the Midlands club are yet to see the best of him.
"I’ve spoken to Jed quite a bit and he hasn’t quite found his feet. It's early days for him, finding the right role and combination and position is a big thing for him to be able to get into the side," he said.
“He’s 21, he’s shown potential and bits and pieces, you can see he has the pace and the touch and now it’s about settling down and going on to be a very good player.
Wallace was in marvellous form for Pompey in League Two last season, where he scored 17 times, but the step-up in class has proved tough so far.
The 21-year-old had never graced the second tier prior to his summer switch, and it seems that Championship football is taking him some time to get used to.
Part of the reason for this can be put down to an injury the skilful midfielder picked up during pre-season, which hampered his progress at his new club.
Wolves will hope that Wallace can find his feet soon though, as he has the potential to be a key man for them, if he can show his creative best.